The Best Stock in Kansas: Compass Minerals

We scoured the nation to identify the best stock in every state. Compass Minerals International (symbol CMP) is the publicly traded company we picked in Kansas. The company headquarters is located in Overland Park.

A word of caution: Since we selected a single stock from each state (plus one from D.C), and choices in some states are sparse, a few of our picks are best suited to investors comfortable with a higher degree of risk. This is not necessarily one of our 51 favorite stocks in the entire U.S., in other words.

Compass Minerals by the Numbers

Headquarters: Overland Park

Share price: $65.30

Market value: $2.2 billion

Price-earnings ratio: 18

(Prices and data are as of June 22, 2017)

Compass Minerals produces two products, salt and sulfate of potash, more cheaply than its competitors. Compass’s rock salt mine, given its unique geology and location near a deepwater port, allows the company to efficiently deliver salt to customers who use it to deice frozen highways. And although sulfate of potash, a specialty fertilizer, is typically produced by adding sulfuric acid to standard potash at high temperatures, Compass makes its potash directly from salt brines, at a significantly lower cost.

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CFRA analyst Christopher Muir says Compass’s strong market position in salt allows the company to generate stable free cash flows (cash generated after capital expenditures). The company is committed to returning that cash to shareholders, and it recently raised its quarterly dividend for the 14th consecutive year, a 4% bump to 72 cents a share, for a yield of 4.4%. Despite warm weather in 2016 and early 2017, sales of salt used for deicing should rise later this year, says Muir, contributing to 22% sales growth estimated for Compass in 2017. And despite near-term pricing challenges in the potash market, he sees long-term growth in Compass’s fertilizer sales. He rates the stock a “buy,” with a 12-month price target of $72, representing a potential 10% gain in the stock’s price.